I have been trying to see a valid wave count which would allow for more movement below 1,225.40 (and an equivalent for Silver).
I have found a wave count which has a very nice fit and is entirely viable. Not only will it provide an explanation of what should happen next if price moves below 1,225.40 and invalidates the main wave count, but it nicely provides a confirmation point above which this new alternate is invalid and so the main wave count would be further confirmed.
While price remains within the pink parallel channel on the daily chart for the main wave count I would seriously consider this alternate.
Click on the charts below to enlarge.
Alternate Daily Wave Count.
This alternate is mostly the same as the main wave count except it sees minute wave iii within minor wave C extending. At 1,206 minor wave C would reach equality in length with minor wave A.
Within the extending third wave of minute wave iii, minuette wave (iv) may not move into minuette wave (i) price territory. This alternate would be invalidated above 1,261.52.
This wave count agrees with MACD; it sees the strongest downwards momentum as within the middle of the third wave. Only because it agrees with MACD will I consider it as a viable alternate.
If price moves above 1,261.52 then I would have full confidence in the main wave count and I would expect that gold is in a new upwards trend to last for weeks.
Main Wave Count – Updated Hourly Chart.
This is an updated hourly chart for the main wave count.
Minuette wave (ii) should now be over. At 1,281 minuette wave (iii) would reach 1.618 the length of minuette wave (i).
My intention for you in providing confidence and confirmation points is to allow you to judge for yourselves your level of risk; as each confidence point and confirmation point is passed the number of alternate possibilities which allow for more downwards movement reduces. The probability of a trend change at 1,225.40 increases.
Initially movement above 1,255.01 would give me confidence in this wave count and a trend change at the low of 1,225.40. At that stage upwards movement could not be a second wave correction within a continuing downwards trend.
Movement above 1,261.52 would add significant confidence to this wave count. Movement above the pink parallel channel (copied over here from the daily chart) would also add confidence to this wave count.